Excess inventory can take up a lot of your capital and warehouse space. Still, deciding to get rid of it isn’t easy, as you might feel like you’re throwing your money away. Several companies can buy and resell our surplus stock. Stock Solutions is a perfect example.
Some of our retailers are well-known brands across the globe. With a bit of planning, it’s possible to minimize your losses and avoid ending up with excess inventory in the first place. There are several things you can do to limit your losses. They include:
Designate a Responsible Person
A great way to improve inventory management is to assign responsibility for this task to a designated person. This person will have to ensure inventory monitoring, participate in decisions on orders to place, and identify slow-moving products.
Define the Concept of Excess Stock
Decide what you mean by “excess stock.” How long do you think an item can be on the shelves before it needs to be acted on? Your answer may be different for each type of article. Consider factors like how much inventory you need to meet customer demand or production needs. Also, consider lead times from your suppliers, warehousing costs, as well as shelf life and speed of obsolescence of items.
Spot Surplus Items
Determine which products you have excess inventory on. Start by dealing with those for which the difference between the quantity in stock and your actual needs is the greatest.
Define the methods to be used to dispose of excess inventory. Several possibilities are available to you: offer your customers a discount on surpluses, offer sales incentive bonuses to your representatives, resell them at a reduced rate to employees, donate them to a charity or even offer them to employees as an indirect benefit.
You can also ask your suppliers to take back products. Some suppliers will be willing to do this even if the return deadline has passed, especially if your business pays the restocking fee. It is often better to pay such fees than to hold inventory for several years.
In the worst-case scenario, consider getting rid of excess items rather than continuing to spend money on storage. Sometimes it can be more economical to throw away things that are unlikely to be sold.
Watch Your Inventory
Making good decisions starts with being well informed. You need to have a good overview of your inventory. Rely on a system that accurately records stock level, storage location, date of purchase, and frequency of replenishment of all items.
Rigorous monitoring avoids this kind of bad surprise. It is also recommended that you regularly check the accuracy of your records by performing a physical inventory of your inventory, compared to the data in your system.